Sales for French Kering's main luxury brand, Gucci, have dropped for the first time in a long time. Added to subsidiary Puma's relaunch costs and the negative exchange rate effects, Kering's financial numbers took a dive.
Second weak year in a row
Just like last year, Kering has had to deal with weaker results. The company, which owns luxury brand Gucci and sports brand Puma, still managed a 4 % turnover increase, to 10 billion euro, but Puma's expensive relaunch, Gucci's disappointing results and particularly the negative exchange rates effects have impacted its net profit, down 4.4 % to 1.18 billion euro.
Gucci represents a third of Kering's total turnover, but has not managed a turnover increase in 2014, for the first time in a long time. Its sales dropped 1.8 % to 3.5 billion euro (- 1.1 % on a like-for-like basis), mainly because of the October insurgency in Hong Kong. Its profit margin also dropped from 31.8 % in 2013 to 30.2 % in 2014.
There were signs of improvement as the year drew to a close however: Kering's luxury branch managed a 6 % turnover increase thanks to Bottega Veneta (+ 11.3 %) and Yves Saint Laurent (+ 27 %).
Kering believes Puma, which revealed its yearly results yesterday, can "see the light at the end of the tunnel after a pivotal year". Thanks to its other sports brands (Volcom and Electric), the Sports & Lifestyle branch managed to limit the loss to a mere 0.1 % drop, a huge improvement over the 8 % drop in 2013.
Kering CEO François-Henri Pinault has "full faith in the group's capabilities to assure consistent profitable growth" in 2015.